Know Thy Customer

From hungry upstarts to established players weathering the winds of economic storms, many businesses don't realize that not all customers are good customers, says Thomas Ritter, professor of marketing at Copenhagen Business School, and co-author of Inside the Customer Universe: How to Build Unique Customer Insight for Profitable Growth and Market Leadership. Successful businesses know the hallmarks of their best customers, he says, and seek out more of them instead of taking on every piece of new business that comes in the door.

Wayne Thomas, founder of marketing company Thomas and Company in Sudbury, Massachusetts, agrees. Author of The Sales Manager's Success Manual, Thomas says the primary questions you need to ask yourself when developing a customer profile include:

• Is there a distinct reason why the customer would buy from your company versus someone else? If not, he says, you'll often be left competing on price, which is usually a no-win situation.
• Do we have a fair chance to compete? If the prospect is just looking for the lowest price, walk away, says Thomas. "If the customer is unwilling to give you background or answer questions to help you create a solution, it's probably a bad fit," he advises.
• How does this customer compare to others we've served in the past? You may have a niche in a specific industry or be a good fit for a certain size or type of customer, he says. However, Thomas advises Solution Providers to be open to similar customers in other industries.

Customer profiles need to match customer needs with the provider's strengths, says Ritter. For example, a Solution Provider servicing a small 9-to-5 plumbing service requires an entirely different skillset than one servicing a financial services firm whose systems need to be up and running all the time. "If you're well-suited to servicing a 9-to-5 business and you take on a 24/7 business, you're going to be feeling some pain, even if the account is more lucrative," he says.

Understanding your best customer profile will help you cherry-pick the most promising prospects out of myriad lead generation sources, such as D&B's Zapdata or even Solution Provider-specific lead programs like VAR Partner. Apply the general parameters of company size, industry, system requirements and other characteristics, says Thomas. Then, further qualify them by asking the key questions about competition and advantage, he says.

Mark Fields, president and CEO, and Jack Dyke, CTO, of Lawrenceville, Georgia-based Virtual Data Products, take a broad view in terms of profiling SMB prospects. "We typically target small businesses with 10 to 50 servers and around 25 to 250 employees," Fields notes. "These customers are typically very short-staffed and need to continually improve their efficiency and save money to be competitive in their market spaces. They see the value and ROI in simple, easy-to-implement and manage solutions."

Customer profiles can also help you make marketing messages more effective, adds Ritter. The pain points for the plumber-who may be able to live without a computer for a few days-are different from those for the financial services firm, which may lose millions if a system is down for several hours. "You can then decide whether you're the always-on provider or the reliable provider who always makes sure your customer has a loaner. You have to know which one you're going after to make your messages work," he says.

Virtual Data Products makes its direction clear in its tagline, "Simplicity Is the Solution." "Every prospect and customer considers their data to be enterprise class, regardless of size, and that they should have the same benefits available to them as an enterprise-size shop. They just can't afford the complexity and manpower required to manage their data the same way," relates Fields. "In partnering with Dell, we're able to offer the same functionalities that larger companies enjoy, but with much lower cost and complexity. That's been the strength of our targeting and marketing to small business prospects and customers."

For additional information on building customer profiles, see this worksheet from American Express with questions on developing a customer profile; these tips on creating a customer profile from StartupNation.com; and Harris Infosource's Guide to Better Database Prospecting.